The Ramsey Show - App - If You Can’t Afford It, It’s Not a Dream Home (Hour 2)

Episode Date: February 10, 2023

George Kamel & Kristina Ellis answer your questions and discuss:   "Do we rent in a bad area to save money?" Kristina's #FrugalFebruary challenge, Getting a good return out of an IRA, "Should we build credit to buy a house?" from the blog: The Best Way to Improve Your Credit Score, "My mom stole the money I had saved for a car". Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Want a plan for your money? Find out where to start: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Девочка-пай Live from the headquarters of Ramsey Solutions, broadcasting from the Pods Moving and Storage Studio, it's The Ramsey Show, where America hangs out to have a conversation about your life and your money. I'm your host, George Campbell. Joined this hour by Christina Ellis, and we're taking your calls at 888-825-5225. You jump in. We'll talk about your life and your money. If it's uncomfortable, if you're scared, hey, we'll change your name. We'll change the information. We just want to make sure that you get the help you need to take the right next step

with your money. 888-825-5225. Teresa's up first in Atlantic City, New Jersey. Teresa, welcome to the show. Hey there. So we're a family of six and we're relocating due to a promotion and just wanting to be close to the family. And while we're selling our home, we are now renting from our family with low payments, but it's in an area that has some gun violence and drugs close by. Now, we can use what we earn from selling our house to pay off student debt and medical debt, or we can put a large down payment on a new house that would be in a much

better area. But we would still be paying about, in So, but we would still be paying about in that house, we would still be paying about 30 to 35% depending on the interest rate once we purchase. Okay. So this house that you're renting, you guys, you guys have moved already or you're going to move? We have, we have moved, you know, we have lots of boxes unpacked because we're ready to move again. But yes, we are here. We're here. And what is, what is the rental cost? What are you paying per month? $800. And what's the new take-home pay with the promotion? Household? It's, well, right, $124,000 a year. And that's take-home?

That, that's, well. Or is that just a gross salary? That's a gross, yeah. So I'm not sure what that would be, you know. If you weren't renting from family, what's the average rent in the area for a similar house? Not, not in a rough area. Um, probably, probably over $2,000, I would guess, or just around there. I'm not too sure because we just kind of moved back here, but I would think around $2,000. Okay. So then you mentioned debt

and that the money that you had from the home sale could pay off that debt. How much debt is that? So we have about $16,000 in student loans. And then I'm not sure about medical, but maybe, you know, maybe five or... And that's everything? That's every... Yes, that's everything. And what was the equity from the sale of the home? A little over $100,000. So is that how much is kind of sitting in the bank right now? It's not here yet, so we still haven't closed. We close on the 13th of March, hopefully. Okay,

so a month from now-ish, you'll have $100,000 in the bank. How much money do you guys have right now, aside from that? We just finished paying off all our credit cards, so we have very little in the bank because we tried to pay everything off so we could just be in a better place. So, you know, we don't have much. Maybe, I don't even know. It's not, it's not much. Okay. We'll call it your thousand dollar starter emergency fund. Does that work? Okay. Yeah. So who are you renting this house from? Which family member? My father-in-law. Okay. And he's had this house for a while. Has he had a lot of problems with tenants in that area? So he was living here and he's, you know, he's a pretty low maintenance guy and he doesn't, it's not like, you know, he comes home and it's not the same. It's not like, you know, he comes home and it's not the same. It's not functioning the same as with me with four kids, you know.

So, of course, he's not going outside and letting kids play around outside. You know, he's kind of passed that in his year. Can you guys get out of this rental at any time? Yes. Okay. Here's what I'm doing if I'm in your shoes. As soon as that check clears in that bank, I am paying off all my debt, and that leaves you with, what, $40,000 in the bank? Yes.

And with that $40,000, we're going to set aside a big portion of that for your emergency fund, which I imagine for a family of your size, if we set aside three to six months of expenses, it's going to be somewhere in the ballpark of $20,000? Okay. And I would be moving somewhere else because you have a great income. I mean, let's say an $8,000 take-home pay and you said you could rent for $2,000, right? Yeah. That's 25%, which is exactly in our parameters to where you still have enough money to invest and live your life and save for vacations. And with the extra money,

I'd be putting it towards a down payment, which you already have a, you know, $20,000 head start. Okay. So then we would miss out on like this dream house that offers a lot. What's the dream house? The dream house, it's, you know, in the woods, has acreage, you know, a greenhouse, a pool, fireplace, you know, room for us to to grow room to put an in-law suite eventually for our parents so it's it's kind of a dream what's the house cost uh it's a 325 well Teresa you said that it would take 30 to 35 percent of your take-home pay a dream house is not a house that you can't afford and at 35 percent of your take-home pay that that's not a dream house is not a house that you can't afford. And at 35% of your take-home pay,

that's not a dream. That's going to be real stressful. And I think you know it. That sign says you know it. You guys aren't that far from this. I mean, if you're making that income and you had no payments in the world, you could save up that down payment pretty fast. You got $20,000 in emergency fund, $20,000 head start on the down payment. How long would it take for you guys to get back to your down payment goal? Two years, max, maybe a year and a half? Yeah, we would just miss out on that house. Yeah, it would, yeah. When did you find out about this house? We found out, it was through friends at church. So it's, you know, he just put it on the market market or he's about to put it on the market.

He's waiting. He wants to sell it to us. So you found out a few months ago? Yeah, like a month. Here's the point. People have dreams that are like, when I was a little girl, I dreamed of being a princess.

You just found out this house exists. There's going to be other houses that you go, this is my new dream house because this one has the clawfoot tub. I've always wanted the clawfoot tub. And that you go, this is my new dream house because this one has the, it has the clawfoot tub. I've always wanted the clawfoot tub. And so a lot of this is just the emotional, like, I would just be so nice to have that wonderful home instead of renting. Well, and when you're living in the ghetto, also seeing any house that doesn't have people shooting guns nearby. Right now, survival is a great dream right now.

So you will get there and you will love the next house you're in. And when you step foot in that, you're going to do it with such financial peace because the payment isn't 35% or 40% of your take-home pay. And you are going to pay it off early and be able to retire when you want. That to me is the bigger dream is freedom. Let me throw out a quick question. So this is a family friend that has this house. And he wants to sell to you. Could you ask him if you could rent it for a few years? Like what would the cost be to rent from him? We are not, he is not

allowed to rent in that area. So it's not, it's an area that you cannot rent. You know, it's, you're there, you're there to live there. Interesting. What is it, the forest, the HOA? How does this work here? It is a forest. It is. It's like protected grounds? It's nearby, yes. Are you renting in Fern Gully?

I got to know. This sounds amazing. Okay. Well, Teresa, I appreciate the question. You guys are in a great spot. I know it stinks to be patient and save more, but when you pay off this debt and you free up that income and you've got this big family that you can now focus on instead of worrying about the next paycheck

to cover that big mortgage for the dream home that is now not the dream, you're going to be breathing easy. So take your time, be patient. Hopefully you take the advice. That's what I would do if I was in your shoes. Yeah, that's great. Thanks for the advice. That's what I would do if I was in your shoes. Yeah, that's great. Thanks for the call. welcome back to the ramsey show i'm george camel joined by christina ellis let's face it guys

taxes are confusing and if you buy what some tax services out there say, you might think you'll never get a grasp on taxes and shouldn't even try. But we think you're smarter than that and you deserve the truth. So here's today's tax tip. You ready? You can cut out a lot of your tax stress just by taking a few minutes to get organized. So if you haven't already, collect all those tax documents and put them in one place. That way you can see if anything's missing. All of your forms should have been mailed or sent to you electronically back in January. Forms for your income, your investments, your mortgage, things like that. And if you're missing something, get in touch with those folks now so you're not stuck when you go to file.

We've got free tax prep checklists at RamseySolutions.com to help you keep track of your forms and records. And once you've got them all together and you're comfortable using tax software, Ramsey Smart Tax will walk you through the steps to file your federal return for just $19.95. Or if your situation is complex, we can connect you with a Ramsey-trusted tax pro like one of our endorsed local providers. Go to RamseySolutions.com slash tax to get our free tax prep checklist and work with a service that's on your side. That's ramsaysolutions.com slash tax. All right, Christina, you did no spend January and the people want to keep it going. So now we have frugal February. What is going on here? Yep. We're going into frugal February. A lot of people who saw the no spend content in January weren't quite ready to do it themselves, but they wanted to go into February.

And so a lot of people are doing a no spend month this month. And then other people who did no spend just felt so on fire. It's addictive. It really is. They're like, let's keep going. Let's keep changing our lifestyle. Like we want to be more frugal. We want to reach our money goals. So I'm like, let's go. I love it because for our family, we've got some aggressive goals this year. We're baby step six. We want to have a paid off house. So we are like, let's go. Let's cut down as much as possible so we can just tackle it. So I'm all on board with Frugal February, and I've been looking for different frugal things to share. I've been asking people on Instagram, what are you focused on right now?

How are you saving money? And I came across this really interesting concept. It's called the Buy Nothing Group. And it's basically a local community where you give things away for free and you get them for free. And the goal is pretty much to fight consumerism and promote the idea of sharing.

Like the whole old adage, the one man's trash is another man's treasure. It's pretty cool because it's like we live in this society now where it's so easy to just one click order on Amazon and just buy the thing that you need in that instant. And it's like, do we really need to purchase that? Do we all need things that are new? Do we all need things right in that moment? So these groups, the idea behind it is that you give things away and you get things and we share and just really help each other save money in that way. So I actually jumped online and joined one of these groups last week.

And it's pretty interesting. You had to type in like the nearest major intersection to make sure that you actually lived in the local community and you could only join one group. So you couldn't join like 12 groups. It prevents like the scammers and the people trying to game the system. Right. And the idea is to create connection between neighbors. So it also has that benefit of, you know, giving to people in your local area and you have to give freely. So it's giving with no strings. This is just like peer to peer goodwill. Right. Instead of going to Goodwill, you just leave it on your porch for someone else. There you go. Saves you a trip. Well,

that's what I was kind of thinking. I'm like, I've been doing this pretty much my entire adult life, but it's pretty cool to see people doing it like an official capacity. So I've shared the dining room table that we use right now. Currently, I've had for about 10 years and I got it right after college from a lady who lived in a really wealthy neighborhood and she just didn't want to bother to move her table. And so she said, if you'll come and pick it up, I'll give it to you for free.

It was a $1,400 table. Wow. Perfect condition. See, I would want to join the Facebook groups in the wealthy neighborhoods where these people are just giving really nice stuff away. Right, exactly. And so it's pretty cool to see that like,

and the thing is, is it's not just on Facebook. You can do this on Marketplace. You can do this on different apps. I saw an app earlier called Free Alerts where it alerts people about things that are being given for free in their area. So I'm like, hey, you know what? A lot of people don't want to move their furniture. A lot of people don't want to take the time to move or haul something.

And it's like, if you're willing to do it, you may be able to get something for free. Or negotiate and haggle with someone over five bucks because they want to deal on it. It just it's going to be gone today if you just leave it for free. Yeah, exactly. And I think that a lot of people naturally want to do this. So in our old neighborhood, there was a community Facebook page and it was fun to see people just posting things up for free. We actually got a $400 play set for free. And then when we moved, we passed it on to another neighbor.

So I just really want to challenge people to pay it forward. But also just think before you just go out and buy something, think through, you know, is there a way to potentially share this and get it for free? Just like change your mindset from the instant buys to more of a community. And you may be able to do this in your church, in your neighborhood. Maybe you join a local buy now group or not buy now. Buy now. Buy nothing. Buy nothing group opposite of buy now. But change your mindset around that. That's one of the greatest things with frugality.

I think a lot of our grandparents did this naturally, right? Like we're millennials and we're sitting there going, we came up with a group. It's an official title. We're so clever. But this is something that people did just naturally back in the day. But our generation has Amazon. We have all these one click ordering solutions where we just buy so quickly, but stop and think, you know, how can we share more as a community so that we're not constantly just spending money

that's not necessary? This is like take a penny, leave a penny for the modern world. I miss those. You know, you were short. You're like, oh, perfect. There's a little thing of pennies right there. I don't have to come up with the extra change. Does it make you less angry than the Starbucks like pay it forward movement? Yes. And now, you know, there's buy now, pay later. I like this version. It's buy nothing, pay never. There we go. That's what I'm talking about. We all share. We all share. I love it. Well, thanks for sharing, Christina. Appreciate that. And good luck to all of you on the no spend challenge. You're crushing it. Let's go. All right, David is calling from New Mexico. Let's see what he has to say.

David, welcome to the show. Hey, thank you, George. Good to be here. Absolutely. How can we help? Well, I'm thinking about retiring in a few months, and I've got a couple of IRAs that are just sitting around doing nothing, and I'd like to find a way to convert them into something that will produce some income.

I'm a little afraid of income annuities, and I'm wondering if there's some other product out there that I don't know about. Now, when you say generate income, what's invested inside of these IRAs? About $470,000. And what are they invested in? American Century, Vanguard, Principal. And you're saying it's not generating income? They make a modest interest.

So what's the rate of return that you've been seeing? Obviously, this year has been a weird one. Each and every year has been weird. I'm not sure. You're breaking up on us, David. Low single digits. Low single digits. Low single digits, yeah.

I wonder if you're not invested aggressively enough. I'm not sure. I'm looking to see something maybe around 6%, 7%. Okay. Well, I wouldn't jump into any kind of annuities. I don't like these contracts with insurance companies that promise payments. No. I don't like these contracts with insurance companies that promise payments. I would leave it aggressively invested and then decide how much of that you need to peel off of that. Do you need this income in retirement?

How soon will you need it? Not necessarily. I have investment accounts and I'll have a small pension. What other retirement savings do you have? I have about 130 in just plain old savings. I've got a brokerage account that generates about $40,000 a year in dividends. And I'll be applying for Social Security when I'm 62, which is only a couple of years away. Yeah, so the goal would be not to need the IRA funds right now.

And if you want to, you know, obviously the goal in retirement is to minimize taxes. And so are you working with a financial advisor right now to walk through what a strategy looks like with all the different buckets you have? Not yet. That's the next thing to do. I think I have that service available through Merrill Lynch. Okay. And you can always get in touch with one of our SmartVestor pros at ramseysolutions.com. But that's where I would be right now. As I'm getting close to retirement, now it's crucial to be working with someone who can look at this from a 30,000-foot view, go, all right,

here's what we're going to do. We're going to utilize this bucket first with your brokerage account, and we're not going to touch the IRAs until this point. And then we're going to use your cash savings over here in case there's a really down year and you don't want to sell the shares at a loss. And so they can walk you through all the nuanced strategies when it comes to that. But you've done a great job, man. What's your income? 90 for my employment and then another 40 from the dividend. Awesome. Dude, you are from the dividend. Awesome. Dude, you are on the path.

I would want to move your investments to something that's producing better than 6% or 7% on average, but I wouldn't pull it out and put it into any kind of annuity. So get in touch with a smart investor pro at RamseySolutions.com. Get a professional opinion on that. But, man, you are in so much better shape than almost every single American. Way to go. Proud of you. This is The Ramsey Show. welcome back to the ramsey show i'm ramsey personality george camp, joined by Christina Ellis. And the phones are open at 888-825-5225.

Rhonda joins us up next in Tampa. Rhonda, welcome to the show. Hi there. How are you guys doing? Doing so great. How are you? Doing well, thank you. Thanks for taking my call. I just wanted to kind of call in as my husband and I are trying to get better at just managing our spending as we're wanting to buy a house and kind of super save within the next year or so. And my question kind of lies around credit cards. So we both currently have credit cards that we do not use with zero balance. And we were wondering if it was best to kind of just cancel the cards or if we should keep them open as they're both kind of our longest line of credit. And with purchasing a

house, credit scores are kind of a big thing. So we just kind of wanted advice on how we should do that and kind of just manage our money easier. Cool. So do you guys have any debt currently? We do not. Awesome. And you have the fully funded emergency fund? Where are you guys at with that? Yes, we do have a emergency fund in our savings currently. Yep. Great. What is your timeline for purchasing the house? You said soon, about how many months or a year? So we live in an apartment right now and our lease ends in July. So we're kind of looking to maybe move and maybe rent before we move out of our kind of city, see if we like where we're moving. We're looking at a city in Georgia. So there isn't really like a concrete timeline,

but we're just wanting to kind of get in the best case scenario for when we are ready to buy a house. Love it. So what is your down payment goal? So our down payment goal is between 10 and 20%. We were looking at buying a house, but we weren't necessarily too crazy comfortable spending more than 5%. So we decided to

kind of just wait it out. So yeah, we're definitely wanting to put down as much as possible. Love it. And that's a great goal. I mean, 20% will help you avoid private mortgage insurance, as you probably know. And what's your household income? So for the year, we make about 180 together. Love it. And so what, if you put a number to this goal, that 10 to 20%, what does it amount to? Um, I would say, let me think, probably closer to between 30 and 50,000. Okay. Awesome. And you'll get there. I mean, that won't take you guys long at all with your income with no debt. So here's what I'm doing in your shoes. You do not need

the credit score to buy the house. And I say that because I did it myself through the no score loan manual underwriting process. And our friends at Churchill Mortgage do these all day. And let me tell you, Rhonda, I put out a video the other day and I rocked the entire internet in anger because they were calling me a liar and they just couldn't Google it for themselves apparently. And so the truth is once you close all of your accounts, your credit score should become indeterminable, which means it's not technically a zero. You can't really get to zero. It just disappears off the face of the earth. And that would cause you to have to go through the manual underwriting process, which just means a real person looks at Rhonda's

financial situation and goes, okay, they make 180K. They have an emergency fund. They've got 20% down. They're doing a 15-year fixed. Yeah, we'll give you a mortgage with a great interest rate, by the way. And so there's no need to keep the credit cards open. And the sooner you close them, the sooner you can begin that process of that credit score becoming indeterminable, which is great because you guys are going to go rent for a year while that happens and continue to save the down payment. Well, and that's what I was going to highlight is there is that period of time when your credit score is going to indeterminable where it could fluctuate. It can fluctuate. So yeah, canceling the cards as quickly as possible. So there is that leeway. We sold our house last year, last May, and still had a mortgage on that house. And so when we sold

it, we went through the process of it going to indeterminable. And there was that nerve-wracking seven months where I'm like, when's it gonna go? When's it gonna go? I was literally asking Dave. I was like, Dave, it's not gone away yet. When is it going away? So there is that period, that little limbo period while it's going away. So yeah, the sooner the better so that you have that runway before you're really, really aggressively searching for a house. Yeah, awesome. Thank you for that. That definitely helps. And then maybe just last, we're trying to do the no spend February. Any crazy tips to try and save as much as possible and kind of budget our finances better? Yes, I love it.

I think getting aggressive with your grocery budget is a big thing. We did no spend and it's easy to leave that grocery budget there and kind of eating up your whole budget. But we went down to $100 a week and going into the grocery store with a meal plan, with a list. We even got online and pre-shopped in advance where we were like looking at all these websites going, okay, how much does this cost? And doing all the math to make sure that our total would be under a hundred. And it was a fun challenge for us. And then we had several people who did like charts where they would have the month laid out and then they would x out you know win days days that they did really well so that if they did have a day where they

happened to not do the no spend challenge where they fell off the wagon they didn't then go oh well the whole month was a fail like we didn't do it it's like no it was one bad day but you got to start again the next day um but then we also just had a lot of people who went all in. And I think that's one of the good things about going all in is it's like when you take all spending out, all discretionary spending out for a month, it's like that boundary is so it's so hard that it's like actually easier than a lot of people thought. A lot of people, I got a ton of DMs where people are like, I thought that I could never do this.

I'm a free spirit. I'm a spender. I didn't think I could do this. But having that strict boundary where you're like, this is just one month and we're going to go all in. It's like they were very surprised by the results. Yeah. Well, awesome. Thank you. That definitely helps you. I try to stick to a meal plan and stick to the grocery list and not buy all of those extra snacks and things that look good in the moment, but don't necessarily fit within the budget. Oh, yeah. And the other one you can do, you know, I use every dollar and do a budget audit where

you literally go through every single item and go, could we do better there? Do we need that? Could we cut that for a month? Hey, how can we shave that down? Yeah, let's get rid of that. And you start to really see the margin because it'll show you at the top of your every dollar budget as you change those numbers out. So if you can figure out a way to save 200 and then make 200 by selling stuff or doing a side hustle, that's a $400 spread every single month. That's five grand a year. And so all of a sudden you get a little pep in your step when you start to see the numbers and what it does for your budget. Yeah, the momentum is amazing. And also get in community. If you have anybody else who wants to do it with you, that is really helpful. Having that extra level of accountability is amazing, especially if it's like neighbors who might see you at the grocery store. If you

end up slacking and walking out with a heaping cart. I know that was big for me, knowing that I was doing it with the Instagram community. I was like, if I go over budget, somebody will probably see me. But just knowing that there were other people in the ring with me where it's like, you know, my church or my friends are doing it and we're all in this together and we all want to win together. That's just also nice to have that accountability to push you. Well, best of luck, Rhonda. Way to go. You guys are in a great, great spot. And I love the conversation about manual underwriting because it feels like no one understands that it's real. And they think, well, if you just have an FHA loan or a VA loan, I've heard about that. But this is a conventional loan we're talking about. And if you have 12 months of

rental history of consistent on-time payments, and then you have another source of non-traditional credit, things like your cell phone bills, your insurance bills, all of that counts towards you qualifying for this conventional mortgage, especially when you follow our plan and you have an emergency fund and you have a great income that can cover your payment because you're doing the 25% or lower and the 15-year conventional. We ran the numbers with one of my buddies at Churchill. You get the same exact interest rate if you do a 15-year conventional fixed rate mortgage with at least 10% down. As someone who has a great or excellent credit score, I would have just as good of an interest rate. That is powerful.

Because that's another comment I got. Well, your interest rate is going to be 47% on that mortgage. This guy's an idiot. And I'm just going, I just told you I did it. And they're like, lies, lies. And they're just frustrated because they want to be homeowners. They don't think it's possible. They think they have to play the games of the system and play the credit score games

that ends up keeping them in debt longer and keeps them further away from homeowners ownership. So get in touch with our friends at Churchill if you want to know about this process. This is for U.S. residents only. Canadians, I'm sorry. For some reason, they just don't allow manual underwriting in Canada. So I don't know what it takes to move to the U.S. I'm sure it's difficult these days, but it's just life is better in America. That's all I can say. Ouch, George. Sorry. Sorry. Not sorry. Hey, more of your calls coming up.

888-825-5225. This is The Ramsey Show. We'll be right back. Welcome back to The Ramsey Show. I'm George Campbell, joined by Christina Ellis this hour. We've got a question of the day from Kristen, who was hanging out in our Facebook group, the Baby Steps Millionaires community, not just for actual Baby Steps Millionaires, but if you're an aspiring Baby Steps Millionaires, you're on that path, be sure to go join that Facebook group. And here's her question. I'm saving for college for children. We have an 18-year-old that will be starting college in January. We will not be on Baby Step 5 for a while, but do we save for her college even though she will already be in college?

Do we help her pay for it, or do we just leave that to her? I don't know. What is the right thing to do? Well, I'm a little confused by the question because she's saying they're saving for, we're about to start saving for college, but they're not on baby step five yet, right? So I'm assuming they still have debt. That's what it sounds like. They're probably in baby steps one through three. And they're going, hey, she's going to be in college. Do we start saving? Do we just go ahead and help her with that? Or do we just leave that to her since we're not at a place to do it yet? Well, if you're still in debt, I'm going to encourage you to wait and pay off your debt. You need to focus on getting yourself out of the hole. There are other ways for her to pay for her college education, and y'all need to start

focusing on that debt and getting yourselves prepared for retirement and all the other, you know, the first four baby steps. Now, it's a little challenging because she's already 18, and you said she starts in January. So she probably, I'm assuming, already has a vision for where she wants to go. I'm hoping that vision doesn't include a $50,000 school that she can't afford. And that's where the conversation is going to get interesting because have you had these conversations before or is this going to blindside her at this point? Has she thought all along that mom and dad are going to pay for my college education and this is going to be a hard conversation? And if so, I mean, that's okay. There's a lot of parents in that situation, but I would just prepare yourself for a difficult conversation, a level setting conversation. And you may even need to apologize

and say, we should have had this conversation sooner. I'm really sorry. I didn't do well with money. That's why we're in debt and we've got to go back and, you know, clean up our mess. And with that, we don't have money to pay for your college. And so you may not be able to go to that four-year private school that you've been dreaming about. We may need you to, you may need to go to community college first for two years. You may need to go to a tuition assistance program. I mean, there just may need to be some adjustments, unfortunately, just given where you are in the process. And it's a hard conversation. It is hard,

but I'm proud of you for asking the question. And if you're willing to pivot now, there are all sorts of options. There's obviously changing schools, but if she's a bright student, perhaps she can get scholarships. Perhaps you can empower her to figure out, you know, how she can qualify. Maybe she can get a full ride to a different school. But I would definitely, you know, put the onus on her and try to empower her to figure out how to pay for her education. And of course, take student loans off the table because we're in the student loan crisis right now. So many people didn't have this conversation and they just let their kids go into crazy amounts of debt. So that is not the option, but it's probably not going to be a super fun conversation at this point. Yeah. We need to do more research and go, what are the options? Can you live at home for the

first year and go to that local community college to save money? And maybe that puts a fire under you guys to go, we got to get out of debt in the next two years so that we can help cashflow the other two for her. That's a huge goal for us. We want to be there for her. And so, yeah, I think encouragement, coaching is really the best thing you can do for her right now. Not sacrificing your own retirement, your own debt freedom so that we can help her go to college. That's not the goal right now. Yeah. And I just think a lot of grace for both of you guys in this conversation because you're in the Baby Steps Millionaire community. You're working through the Baby Steps. You're doing the best you can. So I know that you're probably feeling shame right now and

frustration that you don't already have the cash for it. She's probably going to feel a little frustrated that she's going to have to figure out a way. But I'm proud of you both, for all of you, for actually getting on the journey. But with all those feelings of shame, with all those feelings of kind of being like, oh, that's that to, like, the conversation still needs to happen, even though it's a hard conversation, even though it's not the most fun process right now, be willing to do it. Absolutely. Thanks for the question, Kristen. All right, let's go to the phones. Leslie is up next in Minneapolis. Leslie, welcome to the show. Hi, thank you for taking my call. So the reason for

my call today was in my senior year of high school, I was working a bunch of jobs. I saved up a bunch of money to buy my first car and to pay for college. I would say I saved about $3,000 at the time. And because I was 17, a minor, my mom was like the owner of my account, essentially. So she had access to it. And she asked me to borrow $3,000. And because I've been watching Dave Ramsey since I was like 16, I knew that was a dumb idea. So I said no. But because she had access to my account, she went ahead and took that money out anyways.

And then a couple months later, she never paid me back. A couple months later, she went to a police auction and bought an unregistered car that failed the Minnesota safety exam twice. So it was unsafe to drive. And then she forced me to spend another $2,000 on repairing this car because, like I said, it wasn't drivable. So I'm just kind of in a rut right now. Like, I don't know what to do about my next vehicle. How old are you?

I'm 18 years old. So this was a year ago? Was this the past 12 months? This was a year ago. And even though the car was unsafe to drive, I was still driving it, almost actually gone in accident. So recently I just stopped driving it, so I don't drive right now. What is the current relationship with your mom? So we try to maintain a good relationship aside from like just the financial aspect of this. I

would say I'm really hurt on an emotional level. Yeah. You have every right to be. That's a lot. So you said there was the original $3,000 and then you said she forced you to do the additional $2,000. How did that happen? Well, she bought it without my consent, right? Like she bought this car for $1,500, bought it without my consent, never gave me my $3,000 back. And because, you know, she had access to my account, she pulled another $2,000 out of my account to fix this car. So how? And also, I'm sorry, I forgot to mention, she also suggested that I take out student loans to buy a car. And mind you, I'm on full academic scholarships right now, so I have no loans. And she suggested that I should take out student loans to get a car.

How have these conversations with your mom gone? You said you still have a decent relationship, but anybody in your situation, I just want to stop for a second, and validate, would feel emotionally hurt. That is a very hurtful thing. The money aside, I'm just so disappointed that the person who's supposed to protect me would even do this. Where are you living now? I live on campus. Okay. I go to the University of Minnesota. Are you working? Yes, I do. And are your finances now separated from your mom? As soon as I turned 18, on my 18th birthday, I didn't even have a party. I went to the bank. Get it, girl. Well, before we even dive any further, we'll make sure you stay

on the line after this call. We're going to get you a copy of Own Your Past, Change Your Future by Dr. John Deloney, because you've got a lot to sort through. You've got the financial part, and that's just incredibly hurtful. You're grieving the loss of the finances, but really the loss of this relationship, because you can't trust mom anymore. And that's what every relationship is based on. Yeah. What's worse is if I even bring up like how disappointed I am, she's like, if it wasn't because of me, you wouldn't even have a car. You're so ungrateful. I've done so much for you. I gave birth to you. You don't even know what I'm going through. I really needed that money. That's what I'm, she must be going through something. Does she have any addictions? Does she have big spending problems?

She has a very bad spending problem. And her and my dad are going through some marital problems too. So that doesn't help. Well, I would also, so just to lay the very foundation, you said you're at college. I would see if there's a mental health office at your college where you can see a counselor. because right now you're going through a lot of manipulation. There's a lot of turmoil right now. The relationship with your mom is not healthy and you know that, but it's hard because it's your mom. It's a primal wound. You feel that draw towards your mom. You want her in your life, right? We all want to have those types of relationships, but this isn't healthy. And

I think it will help you to have some outside consistent consultation where somebody can go, you are valid and being mad about this. Like this is hurtful. But then also to help separate, this is hurtful. This is your past. But how are we going to move forward in the future? How are you going to get rid of those wounds and those hurts so that you can move forward with your life in a healthy way? So Leslie, how much money do you have right now? I have about $4,000 in my savings account right now that she does not have access to. Okay, good. We're going to see how much we can get for your current car. It may be pennies and we're going to get you a safe car. And if you can borrow one for now, ride around with friends.

That's what I'm doing around campus for now. But what a sad situation. I'm so sorry for what you have gone through. You're going to climb out of this thing and it's going to be a stupid tax. And it's not your fault, but it's your responsibility on what you do moving forward. Thanks for the call. That puts this hour of The Ramsey Show in the books. Hey, it's Christina Ellis. If you like what you heard in this episode and want to know more about getting started on the Ramsey Baby Steps,

go to ramseysolutions.com and click on the Get Started button. We'll help you figure out the best next step for you based on your specific situation. That's ramseysolutions.com and click Get Started.